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tv   Lunch Money  Bloomberg  December 9, 2013 9:00pm-10:01pm EST

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>> welcome to "lunch money" where we tie together stories and business news. t minus four days until congress goes on vacation. still no deal. exclusive series of interviews. today we're going to show how you buy bitcoins. these new bikes actually cost less than a vespa. how much would you pay for a pen?
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let's talk politics. it was a cozy, intimate weekend on capital hill. patty murray trying to come up with some sort of budget deal. the deadline set after the 16 day shutdown is this friday. after that, congress goes on vacation and does not come back until 2014. stand?do we >> negotiations are moving in the right direction. but i am hopeful will be able to come together. >> the likelihood is still in the 50% range. i would like to give you a more definitive answer. >> that is the way it goes. always right up to the deadline. the two sides are nearing a smaller deal that would replace the sequester cuts over the next two years. we are going to replace these with other sources of revenue. no major taxes.
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kicking the can down the road. >> you heard that right. no push to tackle the major long-term issues. they want to trim automatic spending cuts. that is the sequestration. we are going back on the self imposed budget cuts that were meant to force washington to get tough on spending. that is the mo. republicans have been expecting he would come through. >> i would give the lowest grade to republicans to ryan. he is proving he is a fiscal fake. it is his job to stand up and tell the truth. when he says we can raise spending for defense back to the pre-sequester level or domestic, that is evidence we're going in the wrong direction. >> ouch, paul ryan, that has to hurt. he was president reagan's top budget man.
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they're supposed to be in ryan's corner. stockman says going back on the sequestration is a load of, you decide. >> it is a washington beltway lie that we cannot live it with a six hundred billion of outlays for defense. 50% more than we had in 2000. we had no new industrial in the -- enemies with us since then 200 billion more than bill clinton left in today's real dollars. >> can you get behind a deal that comes out of the stocks? >> it is a total joke. i hope at least 70 people would understand if they do not get at entitlement reform it is going to be far worse later. the republicans would be right to reject this a deal.
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scam.othing but a beltway >> there's plenty more where that came from. he calls janet yellen the architect of fed disaster and says this is dangerous. you can watch online at we are off to wall street and an exclusive look inside the 2014 outlook. we have a new mega-airline in the skies. we will hear from the ceo of the new american airlines. thousands of protesters took to the street. in kiev. demanding the ouster after he shelved a long planned training to focus on ties with russia. they toppled and decapitated a landmark statue of vladimir lenin. take a look. ♪
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>> this is "lunch money." we are also streaming live on, your tablet, and smartphone. blackrock runs 4.1 trillion dollars. when blackrock speaks come at you might want to do yourself a favor and listen. they just came out with their 2014 investment outlook. erik schatzker got the exclusive in the trading floor. what is on the ceo's mind?
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larry fink is thinking about the final version of the volcker rule. it is coming out this week. >> there's a possibility we are going to go too far. i'm not being a pessimist. i am being pretty pragmatic. i do think i know more about the markets then most. i am alarmed that it may be too far it may have some unintended issues that could be impactful. >> he is alarmed at the leverage ratios. you have his industry about.ry >> and i do not believe will be coming from banks.
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it may not come in financial services. maybe it is technology. maybe it will be cybersecurity. the big crisis i do not think will be in an ansell services. >> number two is the blackrock president. he says it is time to be a little cautious. >> at this time, people are very concerned about their future investment. they have seen the stock market do pretty well. they are concerned about where bonds are. they're looking to squeeze more return out of their assets. how much more can they squeeze when they have the finger on the button? we have an institute that debated them in an exhaustive way. over half of our senior portfolio managers think that lower growth for longer is where we're going to be. let me describe a little bit about what that means. people think they are diversified in their risk.
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because bonds and stocks have become correlated, they may not be as diversified in risk as they think. we are looking to get them to think about a 2.5% gdp growth which is fairly slow. stocks are being priced more about the price of momentum versus the earnings. revenues are not coming in where everybody thought. they are getting pretty top as far as valuation go. they should look to diversify into other assets such as real estate. as i said, over half of our portfolio managers and for
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longer. next year to be a bit of a boring year as far as rates are and where the stock market goes. most importantly, people have to get invested. you cannot sit on the sidelines. while there is this uncertainty, there is about $10 trillion sitting in bank account earning almost zero. we want to get people into the market but in a much more diversified basket than just simple stocks and bonds. >> when you say low for longer, is that more a call on the economy or market or both? >> both. we think growth is going too slow for a longer time. we think the fed is going to keep monetary policy easy. short-term rates we think will remain where they are. longer term will budget up a bit.
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these are pretty high. we use a lot to choose out of that. we have a little bit more. we want to be a bit cautious for the longer-term right now. we want to make sure that people are using this diversification to understand that correlation may work against them. >> the rule next year will be a huge factor in how that plays out. we spoke with peter fisher as well. >> i think all over the world we see countries trying to make a handoff from monetary policy to fiscal policy. >> they would love to do that. >> they are trying to let go of the reins. they would like to not be the only game in town. that may be optimistic. i think we would like see fiscal policy pay a bigger role.
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they're trying to get a handoff to consumption of structural reform. central bankers are going to be important. they would love to be less important. would like to be the only game in town. >> to a certain degree, markets are not letting them. the obsession with tapering. and now we're looking as though we might see the taper this month perhaps. is this an unhealthy succession obsession? -- obsession? >> it is probably misguided. taper will take place in a context. will the bank of japan and ecb try to offset whatever tightening comes? you want to think about that kind of upset. we have already seen enough where they are finding some way not to just have everyone upset
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on taper. i think it will be important but not the only game in town. >> can the fed successfully offset the fed of the taper on its own? do you expect the ecb to try to offset it themselves? >> they are focused on it. whether they can remains to be seen. we have seen that forward guidance is a powerful tool. forward guidance is not as powerful as you would like. the bank of england has seen the market protest a little bit. they have had a harder time with forward guidance leaning down. the fed will find some of that. one of the things they may consider is sending out.
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>> bottom line, where'd you put your money? here is dennis stockman. >> the best risk reward trade- off for long-term investment is japanese equities. >> still? >> absolutely. the japanese market was good to investors this year. we have been positive on japan for over a year. it was not magic. it was a combination of factors that were irresistible. valuation, earnings growth, political change, a clear catalyst and a lot of pessimism giving them the rise for greater optimism. >> i want to bring up a chart you provided us. earnings growth helps to explain
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what is going on in japan. everybody thinks they're piling into japanese equities because of abenomics. this does not explain everything. part of it. >> multiple expansion in 2013, it has been less of a story in japan than any of the other world markets. it explains much more in the u.s. and in europe than a dozen in japan. the earnings growth has really driven best. >> you can watch our exclusive interviews online at or our tablet app. getting your hands on bitcoins. it is a lot harder than you thought. we will walk you through how right after the break. the harley davidson ceo tells us
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about all the new bikes that cost less than a vespa. ♪
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>> 12 days of the virtual currency has had a ride. bitcoin. baidu suspended payment of bitcoin. we decided to celebrate the 12 days right here. tis the season. matt miller try to buy one last week. it did not go so well. >> this is the first one that max recommended to me. either you have to wait four days which seemed a long amount of time to get started or you have to give them everything like bank account details, credit card details, visa, social security. i felt uncomfortable giving that
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kind of information. the whole point of me getting a bitcoin is so that i can move my life off the grid and get away from big brother and move into the mountains. >> is that the point? >> i am really doing it because my boss told me to. it is a great idea. >> you do not have bitcoin? >> i do not. over the weekend, i was using a local one to try to find other people. we could never meet up. they're asking for like $1200. last night, i called up max. he was like " no problem, i'll have one in 10 minutes." anhink younger people have easier time. >> you have bitcoin.
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>> he is. i personally do not own very many. i called up a guy. >> he bought more than one. >> i just bought one format. -- for matt. >> matt's guy has his guy who sold them a bitcoin. now matt is selling one for $800. >> i feel crazy giving away this many 20's for one bitcoin. i can buy gasoline with this. my truck hold about $800 worth of gas. here i have a wallet. they have an app for my iphone. max has a bitcoin on his phone. you see a picture of my qr code. >> what are you doing? you are syncing them? >> i am going to scan his own.
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>> all right. you're going to scan his phone. >> is it not working? >> great. it is like a bill gates demo. it almost infamously will always fail. >> this is one of the issues. it has been so hard for me to figure this out. >> show us what is on the screen. what shows up? >> i can say this is the address i put him in. i can put him in as matt miller. now, it sends it. >> the interest is the rising value of bitcoin. this is worth whatever you're willing to pay for it. >> now i have got it.
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that just happened. you just bought a bitcoin. >> i can tweet it. i can show on facebook that i just got one. i believe i can ask for tips. >> load up soon. >> why did you just do it this way? >> people do. on thursday, there is a meeting every week where everyone goes to send them back and forth to each other. there are not that many meetings like that. i was trying to meet a guy at a starbucks to pick one up. >> congratulations. you've got your bitcoin. you can follow him and his 12 days of bitcoin. up next, it is a done deal. american airlines and us airways have come together as one. we will hear from the new ceo. this could be yours for $44,000.
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that is later in luxuries. ♪
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>> this is "lunch money." we are also streaming live on, your tablet, and smartphone. today's moving pictures with the video is the story. the preparations are underway for the national memorial service for nelson mandela. tomorrow it'll be in a 90,000 seat soccer stadium. he made his last public appearance at the same stadium during the world cup. 200,000 protesters took to the streets of bangkok to call for the country's prime minister to step down.
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this is a new effort to change this. blizzard-like conditions in philly turned the game into a virtual snowball. this is not supposed to fall until halftime. more than eight inches fell during the afternoon. in deals, the world's biggest airline takes off today. executives of american airlines and u.s. airways signed the final merger documents. create a new company worth about $18 billion. this began trading today. doug parker is seeking one billion in combined revenues and cost savings. we asked what this all means for airfares. >> airfares are going to do what airfares do. they are related to all sorts of things like this.
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this does not affected at all. we are keeping all of the airplanes. that is why this merger works. we need all of that. only 12 overlapping networks. supply will be unchanged. prices in our business move a lot based on any sort of factors. this will not be one of those. >> the big airlines have been cutting capacity as well as focusing on more customers. this has created some wiggle room. like jetblue. spirit, even more. coming up, the ceo of harley davidson tells us of a new $700 bike that is better than some of the ones that cost more.
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cheaper than a vespa. one luxury hotel is selling everything. we will explain luxury. could that be? is that carol master in a brown ups uniform? she's taking us inside ups tomorrow. better get these boxes moving. she will be live from the companies. it shall also be joined by scott davis. the ceo. maybe he will show some packages, too. a fun one. ♪
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>> harley davidson pushing the envelope.
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it is the first and only motorcycle that offers a gps. it is also new think that opening new factories in india to reach asian customers. here is the question. is a cheap bike still a hog? >> it is a real harley. it has the same look and feel. this is a big event for us. a few years ago, we really talked about the strategy going forward and how he wanted to expand the brand and make it more meaningful to other customers like younger riders. it takes a while to develop these and bring them to the market. this is a total new frame. it is agile. it is nimble. it was really developed with the voice of the customer.
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we talk to over 3000 customers and dealers in 10 different countries. this bike is the culmination of that voice of the customer input. it is really intended for the new generation. >> how hard was it to go to a liquid cooled engine? heavyk of these big, engines. >> it was not really difficult. every bike that we designed -- >> why? >> it is part of this whole being agile, nimble, being in urban bike. we think about the drivetrain in the engine for every bike that we designed and built. not that we're going to use it across the entire line. >> that is true. if you're sitting in traffic in new york, i watch the
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temperature gauge just climb. it is scary. you are moving heavy overseas. i think i saw a prediction that 40% of your sales will come from overseas next year. >> this goes back to when i just started. we were just putting the stake in the ground on some basic things we were targeting. we said we were trying to get to some of these by 2014. last year we were probably in the mid-30's. we are inching up on that. >> apple trying to do a lower- cost version of the iphone 5. for the overseas market. it takes a way a little from the brand. the customers overseas do not understand it as much. are you concerned?
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i buy a $20,000 harley and people are buying them for 6000. i'm not totally impressed with that. >> this is an entry point for a lot in new riders. if you think about market even outside of the united states, we will want to this initially in india, portugal, italy and spain. those are big markets. in india -- there were 13 million motorcycles sold. most were lower displacement motorcycles. there is an appetite growing for the higher end bikes. our goal is to be there to meet and greet these customers as their personal disposable income increases and they move up. we think this is a perfect intro level bike for those customers. >> the stock has risen 197% since he took the helm. what is the plan? >> this is something we have talked about continuously with
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our board. i think we have a very clear view on one the succession looks like. as we do transition, the good news is there's going to be a great team in place with a lot of runway left. more importantly, these people on this team have been part of putting the strategy in place. they are part of building everything we have done to get us where we are. we have completely revamped how we manufactured bikes in a more manufactured way. we completely revamped how we design and develop bikes. shorter timeframe. less costly. more focused. we are bringing new products to market that will not only satisfy and excite our core customers like the rushmore
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launch but also like the street bikes for the younger writers. -- riders. we have a whole pipeline. >> the first production is to come out with a gps. you would think someone else would do it. >> from my perspective, i do not think the future has ever been brighter. >> he wanted to sell more bikes, especially overseas and to women. they got a school. need a christmas gift for the man who has everything? we can help. it will cost you though. maybe you're into refurnishing your home. an option you will not want to miss in "luxury." ♪
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>> it is all about what you can buy and where you can buy it, especially in nigeria. africa's largest oil producer and there are plenty of people with money to spend. tom gibson reports. >> these sparkling watches are not in the shop windows of london. this is nigeria's largest city. they used to have to go abroad for luxury staples. now big brands come to them. >> there is a huge opportunity to be here. not only at the highest end but also there is a middle class that is really growing that needs access.
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>> this economy is expected to grow in 2014. survey.g to a international brands are keen to gain a foothold. one of these is porsche which recently opened this in victoria island. a base for company's headquarters. >> the middle east and african region is the 4th largest globally. it becomes more key with china and india and africa. you can expect more flashy and unveiling.
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>> in london, one hotel --they are selling just about everything. they are auctioning this as part of a major refurnishing. >> feel like you need a touch of five-star luxury in your home? now is your chance. this is auctioning entire suites, beds, paintings, the lot. this is being stripped. the guestrooms and public areas are getting a new look, an update from the neoclassical feel. new technology is being installed with an eye for the building's history. among the highlights, two crystal columns chandeliers with a price of over $8,000. if those items are a bit much, then how about silver cutlery in silver napkin holders?
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the hotel closes next week and will reopen in autumn of next year. >> what about a pen? turns out you have to go to germany. specifically have to go to montblanc. 44k.will sell you one for >> white gloves at the pen factory. to handle a 32,000 year old limited edition. who really uses pens in the digital age? >> more notifications i get, the more i appreciate something headroom in. there's a hunger for it. they tap into mass culture. they made 88 charlie chaplin editions which have tripled the
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prices at auction. when someone says $22,000 per pen, what you say? >> many people say that. if they see this first they say it is crazy but then we can show how it is made. >> i am holding 200,000 euros worth of gold. this weighs five kilos. first it gets rolled into the right form and then cut out and stamped into the nib. with the hundred steps, no two pens are ever alike. it cost an extra 1200 euros for the basic service. >> we catch the dna from the hands and the movements and then we can adapt to the handwriting.
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>> for a fully personalized pen, production takes 2.5 years and up to one million euros. >> the beautiful thing is when ever we have a collector who has been collecting for years, whenever we does his instrument likeese people behave kids. >> do not worry about misplacing such an expensive item. >> you stop using us losing your pen as soon as you buy a montblanc instrument. >> it is a writing instrument. bloomberg, homburg. >> for more on the good life and all things luxury you can visit today's mystery meet. some christmas gifts are priceless. >> stop right there. that is wonderful. >> what do you think?
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what is that? >> it is a major award. >> diehard fans of a christmas story can vote on the chance to stay for two nights in the house where ralphie lived. it is in cleveland. if that is what you're into, you will enjoy it. ♪
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>> is approaching 56 on the hour. where we close out the session. guess what? a record for s&p 500. it was enough on top of the game we saw on friday continued momentum on the heels of the
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better than expected jobs report. roseains we saw as the dow five points when all is said and done. for more on the markets and the outlook for next year, i want to bring anna scott for wells fargo. he is right here with me in our newsroom. .e saw the jobs report for today's, at least, change in the sentiment and raised optimism that the recovery is getting back on track. i was looking at your most recent strategy peace out from your firm. it talks about continuing optimism. not a lot of talk about tapering . any obstacles that might bring. is that a fundamental concern? say as far as tapering goes, i do not think the fed will do anything next week in a. maybe by march. really, the jobs report over the
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last few years, the average were about 105,000. not really much better than that. i would argue we are still in the modest growth. modest inflation. the fed does not want to make a mistake. we have really low inflation. they have the room to not taper right away. clearly, they will have to take at some point. what i think they will do and not on the statement that comes out after this meeting, maybe january or the next one, they will tell us in the statement in that speak, next time we are going to do something. i think they will. historically, granted we have not been looking at the minutes for all of that long from the fed. they are going to tell you in --ting and in the minutes and they are not want us to
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divine what they are going to do. they will tell us. march maybe after that. it will be small. >> the stocks and what it means. you are saying modest. it seems i you think we will continue to see game next year but not at the same magnitude we have seen this year. >> not at all. our target range for the end of was 1700 in the smp. we are above that by 6%. but some our work, we are ahead. thatate into the return stole from the returns of 2014. we had a target of 1900. throwing in a couple of percent dividends a you are talking six percent, seven percent. that is nothing to sneeze at. we are not going to steve anything but we saw -- see anything like we saw this year. it'll still be a good year. we want our customers invested.
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this cyclical market has maybe three years to go. if that is the case and we see seven or eight percent total return, over a three-year compounding period, that is pretty good. >> you like industrials. we are out of time. scott, thank you so much. good to see you. i am julie hyman. ♪
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